Dow Under 7,000?
Maintain All Positions
“The Democracy will cease to exist when you take away from those who are willing to work and give to those who would not.”
- Thomas Jefferson
Dear Bottarelli Research Member,
Good morning. I find it truly amazing how many of the quotes from our country’s founding fathers have become so relevant (and spot on the money) in today’s economic conditions.
We’ve all heard Thomas Jefferson’s famous quote about banking institutions being more powerful than standing armies. But in my view, another quote from Jefferson (above) describes today’s market situation perfectly.
With AIG set to report unregimented losses and Detroit automakers set to ask for their next round of billions, it’s no surprise that the major market averages are pushing stocks to levels that we haven’t seen since 1997. That’s 12 years of gains, completely wiped out. It’s hard to believe that the Dow hit 14,200 in October of 2007. As I write today, the Dow could dip under 7,000. I find this both amazing and troubling. Today’s Dow chart is shown below:
Because of this formation, I’d like to stand pat with our current positions. The PCP March 60 Puts (PCP OL) that we entered yesterday for $4.60 have hit $5.30 today, so hold for more gains.
The NEM March 40 Puts (NEM OH) that we entered on February 13th for $2.32 have traded as high as $2.30 today, so we’re inching our way back on this one. Hold.
The AGU March 40 Calls (AGU CH) that we entered on February 13th for $3.70 took a hit yesterday, but AGU continues to display a bullish chart formation in the midst of a weak market. As an upside hedge, maintain these calls.
And finally, the KSS March 35 Puts (KSS OG) that we entered yesterday for $3.05 are down slightly today, currently trading for $2.80. But when you have Target reporting a 41% profit decline, Macy’s reporting a 59% profit decline, and Office Depot reporting a $1.5 billion dollar loss, it sure doesn’t paint a strong picture for Kohl’s. Therefore, let’s hold these puts as well.
As always, I’ll be out with further updates as the day progresses. But until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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